Citigroup warning on container lines shares
Citigroup has downgraded two container lines' share ratings downgraded in recent days based on the idea container shipping recovery may hit an end-of-year lull.
China Shipping, one of China's two state-owned lines, and NOL, parent company of APL, were downgraded to 'sell' by Citigroup.
In a statement announcing the Singapore-based NOL downgrade, the bank said, 'investors should sell into current strength in the run-up to the 3Q peak season and 2Q10 reporting season. We fear earnings may head downhill after the peak season on weaker U.S. retail sales and accelerating newbuild deliveries.'
Meanwhile, Shanghai-based China Shipping was downgraded from 'hold' to 'sell' because 'container boxes and freight rates are likely to soften because U.S. consumption has started weakening with Europe’s financial woes. But the possibility of a sharp fall into losses, as in 4Q08-1H09, looks slim.'
Citigroup did say China Shipping should benefit during the second half of 2010 from higher transpacific rates.
Citigroup warning on container lines shares
